Going through a separation of any sort can be incredibly tough for all parties involved. There is a lot to take into consideration, and a lot to work through too. One thing you will need to sort out at some point or another during a divorce or dissolution of civil partnership, is the finances. Read on for a few tips from Mr Lender on how to figure out your finances and manage your money when going through a separation.
Consulting a solicitor
When going through a separation there are often obstacles which need to be overcome before you can move onto the next stage. Coming to an agreement about your finances is one of these obstacles. If you and your partner are on amicable terms, you may be able to work through your separation without too much difficulty. It isn’t always necessary for you to consult a solicitor, though it might be beneficial if your situation is a little more complicated.
If you decide to hire a solicitor to help with your separation, you can hire them for however long you need them. It could be that you only need a little professional advice, so will therefore only consult a solicitor once or twice throughout the process, and this is okay. You may find that you need to speak to a solicitor on a regular basis, or not all – and this is okay too. The choice is yours when it comes to consulting a solicitor. Though it is worth considering the cost of hiring one as it can become quite a costly expense. Some solicitors will charge a flat fee, while others will charge an hourly rate.
Whether or not you need to pay to hire a solicitor also depends on where in the UK you live. If you live in England or Wales, you are able to sort through your divorce or dissolution yourself without the help of a solicitor. The laws are slightly different in Scotland and Northern Ireland.
Working through a separation
Managing your finances while going through a separation can be immensely difficult. It’ll often be made a little easier if:
- both you and your ex-partner have agreed to the divorce or dissolution of civil partnership
- there are no children involved – or if you do have children, they’re old enough to not depend on you financially
- either you or your ex-partner doesn’t depend on the other financially
- you are able to agree on how any property or possessions should be divided between you
- you can discuss your different options amicably
Paying legal and professional fees
When filing for a divorce or dissolution, you will need to pay a number of fees and charges – court fees being one of them. The amounts will vary depending on where you are in the UK, and what it is you are paying for – though the main amounts in England and Wales are as follows:
- Filing for divorce or dissolution – £550
- Filing for judicial separation – £365
- Application for consent order – £100
- Application for financial order – £255
If you receive certain benefits, you may be able to get some help in paying these court fees. You may also be able to get help if your income and total savings fall below a certain threshold.
Separation without the solicitors
Whether you hire one to consult on a regular basis, or you simply use them as and when you need them – solicitors can be incredibly costly. In England and Wales it is possible to sort out a separation without the involvement of solicitors or any other professionals. If you do decide to work through a separation on your own, you will need to make sure it is legal and proper if you want it to be final. Although a solicitor can be expensive, it is worth consulting one at least once if you’re ever unsure about anything in particular.
If you and your ex-partner are able to sort through your separation amicably, this might be your best option. You will simply need to download the necessary forms – known as a D8. You can even get an instruction leaflet which guides you through the process – this is known as a D183.
There are also divorce/dissolution services available online which will help you to go through the process of a divorce. However, if you do opt to pay for this service you should always make sure you understand what it is you’re receiving as some companies will only offer a service where they complete the paperwork on your behalf, but they won’t actually help you to reach a financial settlement.
Alternatives to a divorce or dissolution
If you haven’t yet come to a final decision as to whether to go through with a divorce or dissolution, you can opt for a ‘separation agreement‘. This is an agreement which is set in place to help finalise any financial arrangements while you and your partner are separated. A separation agreement will help resolve issues such as:
- who will pay the mortgage or rent?
- what will happen to any savings and investments?
- who will continue to live in the family home, and what happens if it is eventually sold?
- what will happen to any outstanding debts, such as loans and overdrafts?
- who will be responsible for paying the household bills?
- what will happen to any personal belongings such as furniture and cars?
- will a form of maintenance be paid or not?
- what will the childcare arrangements be?
The benefits of going through a separation agreement is that it is far more flexible than a divorce as it isn’t officially legally binding. It also provides financial clarity and certainty while going through a separation. However, the fact that it isn’t legally binding can mean it is far more difficult to enforce, and neither party is legally required to stick to it.
Owning your home and keeping your finances protected
If you and your ex-partner currently share a home, you will need to discuss the situation with your mortgage. If the home and mortgage are currently in your ex-partner’s name, you can register your interest in the property to make sure it cannot be sold or remortgaged without your knowledge. This can be through the Land Registry and is often a fairly straightforward process.
If, however, the mortgage is in both of your names, you will need to contact your mortgage advisor and explain your situation to them. You will also need to bear in mind that both you and your ex-partner are responsible for keeping up with the mortgage payments – this means that if you agree to pay the mortgage 50/50 and your partner misses a payment, you will need to pay the rest to avoid falling into arrears. The same applies to any other outstanding loans which you may have.
Another thing to consider when going through a separation, is any joint bank accounts you and your ex-partner have together. If you do share a bank account with your ex-partner, you may want to freeze the account until a decision can be reached as to who is entitled to what. If this is something you choose to do, you will need to ensure any income isn’t going into that account as you may not be able to retrieve any of your wages.
If you and your ex-partner have children together, you will need to discuss the issue of child maintenance. There are four options available here:
- family based arrangement
- direct pay
- collect and pay
- court-ordered arrangement
The most simplest of these four solutions, is the family based arrangement. This is where both parents come to an agreement over how much is paid and on which dates. This is often the quickest and simplest arrangement- however it isn’t legally binding. This means that if your partner chooses to stop paying child maintenance, there isn’t too much you can do in terms of legal action.
Other options you may want to consider are ‘direct pay’ and ‘collect and pay’. ‘Direct pay’ is when the Child Maintenance Service (CMS) calculates how much the paying parent can afford and should pay, and both parents then come to an agreement as to how and when the child maintenance will be paid. The other option, ‘collect and pay’, is when the CMS calculates how much child maintenance should be paid, before collecting an amount from the paying parent and passing it to the other.
The benefit of arranging child maintenance through the CMS, is that the amount of child maintenance needed to be paid is calculated for you, meaning neither you nor your ex-partner will need to do any working out yourself. Another benefit, is that unlike the ‘family based arrangement’, payments set up via the CMS are legally binding and payment can be taken forcefully via the CMS if the paying parent stops paying child maintenance.
Another thing to consider when arranging child maintenance payments is to think about whether it will be paid in a single fixed amount, or if it will vary to help with other necessary expenses. It may also be decided that the paying parent should pay a set percentage of their wages each month – this can be great if the paying parent receives a pay rise, for example, but it does mean it is less predictable.
Help and support
If you are currently going through a separation, there is plenty of help and support to get you through it. The Money Advice Service has lots of information on their website about how to manage your finances when going through a separation, and there are also lots of support websites online too. If money is a little tight while going through a divorce or dissolution, create a budget to help get your finances back on track. Though you should also seek debt advice if you feel that you are struggling financially. If you decide to go through a divorce or dissolution without the help of a solicitor, it is always worth seeking advice if you ever find yourself struggling in any way.